Political Donations FAQs: Who Can and Cannot Donate to a Political Campaign in the USA

As political donations are not tax-deductible, no nonprofit can endorse a political candidate in any way. The 501 (c) (3) organizations are tax exempted, so they are forbidden to endorse a political candidate for public office. This prohibited endorsement includes distributing any printed material or making oral statements in or against the favor of any candidate. Hence, any written or oral political communication is forbidden by the Internal Revenue Service (IRS) of the United States.
 

Churches, like other charities, also come under 501 (c) (3) organizations that enjoy the tax exemption statuses from IRS. This automatically disqualifies them from promoting or opposing any political candidates. This has become a norm for the IRS to warn all 501 (C) (3) organizations to keep themselves away from political activities in any election cycle. It is pertinent to note here that his ban is on explicit political endorsement only, and churches still favor some political stances in the hidden words. For instance, the churches in the United States have been voicing their opinion explicitly in favor of conservatism without receiving any penalty from IRS.
 

Corporations, by no means, can donate directly to political candidates. However, they can promote or oppose a specific political candidate through Political Action Committees (PACs). As corporate donations are usually large, they have to disclose them under the PAC regulations to keep the transparency intact. Money contributed directly to politicians in elections is called hard money and is prohibited for corporations.

Public schools enjoy tax exemption status as well, so they are categorically prohibited from supporting or opposing any political candidate in election cycles. However, different ways are being adopted through which schools became an epicenter of politics in the United States. For instance, the Tinker v. Des Moines case of 1969 depicts students’ free will of clothing to support some specific political stance in accordance with the first amendment. So, at a time when schools cannot contribute financially to any political candidate, students can show their political allegiance with clothing anytime without any legal complication.
 

When the campaign is over, and the political candidate is left with donations, they have a number of options to use the remaining funds. First, most candidates pay the campaign debts with the remaining funding. The only thing politicians cannot do with funds is to use them for personal use. Most of the politicians transfer the funds to their next campaign by donating to PACs. This way, they can keep their funds safe for future political endeavors.

Tax exemption is a broad topic in the United States. There are various broader domains under which the tax exempted organizations may fall. The tax-exempted organization registered under 501 (c) (3) is prohibited from promoting any campaign categorically. However, organizations falling under 501 (c) (4), (5), and (6) can promote a political campaign as far as it is not the organization’s primary motive.